Q1. What is the difference between a tax credit and a tax deduction?

A tax credit comes off your tax bill where as a tax deduction comes off your income before calculating your tax bill. If you pay tax at the 40% rate a tax deduction is more valuable than a tax credit.

Q2. What is a personal tax credit?

Everybody gets a minimum tax credit which reduces your tax bill. A single person’s tax credit is €1,775 for tax year 2023 which means you can earn up to €8,87 free of income tax for the year.

Q3. Do married couples get a higher personal tax credit?

Yes for married couples the personal credit is €3,550 (double the single persons tax credit) for the 2023 tax year.

Q4. What are the conditions for claiming a one-parent family tax credit?

The credit is available where a dependent child resides with a parent for all or part of a year and that parent is not co-habiting with another person. This credit is also worth €1,775 for the year 2023 which gives a single parent the tax credit that a married couple would get.

Q5. What is a widowed person’s tax credit?

A widowed person whose spouse has died in a given tax year is entitled to the widowed person’s ‘bereaved in year’ tax credit ( €3,550 for the 2023 tax year) for that year only. This only applies provided the survivor is not already receiving the married persons tax credit for the same year. Thereafter the yearly tax credit depends on whether or not the widowed person has dependent children.

Q6. What is a widowed parent’s tax credit where there are dependent children and for how long do I receive it?

A widowed parent’s tax credit of €1,775 for the 2023 tax year is given plus the following additional tax credit for the five years after the year of bereavement:

• €3,600 in the first year after bereavement
• €3,150 in the second year after bereavement
• €2,700 in the third year after bereavement
• €2,250 in the fourth year after bereavement
• €1,800 in the fifth year after bereavement

Q7. What is a widowed parent’s tax credit where there are no dependent children?

If there are no dependent children the yearly tax credit for tax year 2023 is €2,315.

B) Employee PAYE Tax Credit

Q8. What is a PAYE credit?

A PAYE credit is a special tax credit that employees are entitled to. The credit is €1,650 the same as a single persons tax credit. This means a single person in paye employment can earn up to €16,500 free of income tax per annum.

Q9. Do self-employed people qualify for the PAYE credit?

No, self-employed people do not qualify for the PAYE credit unless they have PAYE income.

Q10. If a person is employed by their spouse, is that person entitled to the PAYE credit?

No.

Q11. If a child is employed by their parent can they claim the Paye credit?

Yes provided the child is employed on a full time basis in the business. If children are employed on a part time basis they cannot claim the Paye credit.

Q12. What is a proprietary director for PAYE credit purposes?

A proprietary director for PAYE credit purposes is a director who owns more than 15% of the share capital of the company in which they are a director?

Q13. Do proprietary directors qualify for the PAYE credit?

No, proprietary directors do not qualify for the PAYE credit for income received from the company in which they are a proprietary director. However they should qualify for the earned income credit.

Q14. Does the spouse of a proprietary director qualify for the PAYE credit?

No, the spouse of a proprietary director is not entitled to the PAYE credit where they are employed by the same company in which the other spouse is a proprietary director.

Q15. If a proprietary director has other PAYE income from a non-proprietary directorship, does he/she qualify for the PAYE credit?

Yes, a proprietary director in receipt of other PAYE income from a non-proprietary directorship is entitled to a PAYE credit.

C) Medical Expenses

Q16. Are medical expenses claimed as a tax deduction or credit?

Since 1st January 2009, medical expenses are claimed as a credit and not a deduction except for Nursing Home costs which are still allowed as a tax deduction.

Q17. What is a Form Med2?

If you wish to claim tax relief for expenditure on qualifying dental expenses, you must get a completed Form Med2 from your dentist.

Q18. For how long must I retain medical receipts for possible Revenue verification?

Medical receipts must be retained for a minimum of four years for possible Revenue verification.

Q19. On a foreign holiday I incurred medical expenses for a visit to a doctor. Can I include these expenses in my annual claim for medical expenses?

Yes, provided the practitioner in question is entitled under the laws of the country in which the care is provided to practice medicine there.

Q20. I incurred expenditure abroad on health care that was not available in Ireland; can I claim for expenditure on travel & accommodation in my annual medical expenses claim?

Yes, where the care provided is not available in Ireland and provided the costs claimed are reasonable for travel and accommodation.

D) Tax Relief for Pension Contributions

Q21. What relief is available for pension contributions?

A deduction is available for pension contributions made to Revenue approved pension schemes. The tax relief is based on an age-related percentage subject to an income cap for the purposes of the relief.

For 2020 the rate of tax relief is 40% of the amount paid assuming you pay tax at 40%. If you pay tax at the 20% rate then your pension tax relief will be at 20%..

Q22. What are the age related percentages?

• Up to 30 years of age – 15% of earnings subject to income cap
• 30 to 39 years of age – 20% of earnings subject to income cap
• 40 to 49 years of age – 25% of earnings subject to income cap
• 50 to 54 years of age – 30% of earnings subject to income cap
• 55 to 59 years of age – 35% of earnings subject to income cap
• 60 years or over – 40% of earnings subject to income cap

Q23. What is the income cap for tax relief on pension contributions?

The income cap on which the maximum pension relief is calculated is €115,000 for the 2023 tax year.

Q24. If I make pension contributions in the tax year 2024 can I claim tax relief for them in the tax year 2023?

Yes. This is called a backdated claim and can be used by PAYE earners to create tax refunds or by the self-employed to reduce last year’s tax bill.

Q25. All this sounds complicated. Is there any easy way to work it out?

Our free pension tax relief calculator will do all the work for you and tell you what is the maximum pension contribution you can make to get maximum tax relief.

E) General Tax Credits

Q26. Am I entitled to an age credit?

You are entitled to the age credit if you aged 65 or over in the year of assessment. For married couples once either spouse is 65 or over the age credit is allowed. The single person’s age tax credit for 2023 is €245 and for married couples its €490.

Q27. Am I entitled to a credit for trade union subscriptions?

The trade union subscription credit has been abolished after 2010.

Q28. How much is an incapacitated child tax credit?

The incapacitated child tax credit (€3,300 in 2023) is available for each incapacitated child.

Q29. What are the conditions for claiming an incapacitated child tax credit?

It is available where the child is under 18 years of age and is permanently incapacitated by reason of physical or mental infirmity, or if over the age of 18 is permanently incapacitated from maintaining himself and was so before he reached the age of 21, or was in full time education at the time he became permanently incapacitated.

Q30. How much is the dependant relative tax credit?

The dependant relative tax credit (€245 in 2023) is available where an individual maintains a relative at their own expense.

Q31. What are the conditions for claiming the dependant relative tax credit?

The relation must be: – A relative of the person or their spouse who is incapacitated by old age or infirmity from maintaining themself, or – a widowed mother or father or – a son or daughter who is resident with the person and upon whom the person is dependant by reason of old age or infirmity

Q32. Can I still receive the dependant relative tax credit if the relative is in receipt of an income?

Yes, you can still receive the dependant relative tax credit as long as the dependant relative’s income does not exceed €16,780.

Q33. How much is the blind person’s tax credit?

The tax credit is €1,650 in 2023. Where both spouses are blind, the credit is doubled to €3,300. An additional credit (€825 in 2023) is available for a guide dog.

Q34. How much is the home carer’s tax credit?

€1600 for the 2023 tax year (€1500 for 2019)  and can be claimed by married couples where one spouse stays at home to care for children or other dependent persons.

Q35. Can the home carer’s tax credit be claimed where the home carer is in receipt of income?

Yes, where the home carer’s income is not in excess of €7,200. A reduced credit applies where the income is between €7,200 and €9,600.

Q36. Can I claim a credit for bin charges paid?

No.  This credit was not allowed after the 1st January 2012.

Q37. What are the conditions for claiming a credit for tuition fees paid?

The tuition fees must relate to a full-time or part-time undergraduate course of at least two years duration or a postgraduate course at an approved college or institute of higher education in Ireland or another EU member state.

The maximum amount you can claim is €7,000 per person per course which gives a tax credit of €1,400.

However no tax credit is allowed for the first  €3,000 of fees for full time courses and the first €1,500 for part time courses. This is know as the disregard amount.

Where you pay for more than one student only one disregard amount should be applied.  If one of the course is fulltime you must use the full time disregard amount.

Q38. Can the tuition fees tax credit be claimed for the student contribution?

Yes, the student contribution should be included in the tuition fees claim.

Q39. Can I claim a tax credit for medical insurance premiums paid by my employer on my behalf?

Yes, the gross premium can be included in your tax return form and the tax credit will be given at the standard rate of 20%. This is often overlooked even though employees will have paid BIK on the payment by the employer.

Q40. Can I claim a deduction for permanent health insurance premiums paid?

Yes, premiums under permanent health insurance schemes are allowed as deductions for income tax purposes up to a maximum of 10% of total income in the year.

Q41. What is rent relief?

Tax relief at the standard rate may be claimed by tenants for rent paid in respect of rented residential accommodation which is their sole or main residence or your child’s accommodation required to attend college. This relief was introduced for the years 2022 to 2025.

The maximum credits available in 2023 was

• €500 for single person
• €1000 for married couples

Q42. Is the credit for renting private accommodation available in the 2021 tax year?

The rent tax credit is not available before the 2022 tax year.

Q43. What are unsecured home loans and is tax relief available for interest paid on them?

Unsecured home loans are loans to buy or improve your residence eg credit union loans or short term bank loans. A tax credit may be available for the interest paid on the loan. If you already have a mortgage and are receiving full tax relief at source then you will not be entitled to any further tax relief on the unsecured loans.

Q44. What is year of marriage relief and how do I claim it?

Year of marriage tax relief is available to couples who marry during the tax year and a claim has to be made to the tax office for this relief. You may get a tax refund if you got married early in the tax year and where both spouses are working where one pays tax at the 20% rate and the other at the 40% rate.

Q45. What relief is available for Employment & Investment Incentive Scheme (formerly BES investments)?

A tax deduction is available for investing in a qualifying company. The maximum amount which qualifies for tax relief in any one year is €150,000. Any unused relief can be carried forward to future years. The relief is not transferable between spouses. Tax relief in the first year is allowed at a tax rate of 30% and the final tax relief is allowed in year 3 at 10% to make a total tax relief of 40%.

Q46. Are maintenance / alimony payments allowable as tax deductions?

Maintenance / alimony payments are only available as a tax deduction where the payments are made for the benefit of the separated spouse. Payments for children are not allowed for tax relief.

Q47. Is there tax relief available for employing a carer to look after me?

Yes, a deduction is available for the employment of a carer for an incapacitated person subject to a maximum deduction of €75,000 in the 2020 tax year.

Q48. If I have a small amount of non PAYE income do I need to complete a tax return?

Yes unless the Revenue agree to reduce your tax credits to collect the tax due on your non PAYE income.

Q49. What tax return form do employees with additional income have to complete?

The annual tax return Form 12 is the one for employees with additional income under €5,000. If your additional income exceeds €5,000 you must submit a Form 11.

Q50. What tax form do I need to complete to claim tax back on medical expenses?

You need to complete a tax form Med1 to get tax back on your medical expenses.